XMH > OSK-DMG: XMH announced that Credence Capital Fund II has become its first institutional investor, subscribing to 36m new shares at SGD0.2774 per share. Interestingly, Credence also took up 3-month call options on another 47.6m vendor shares at a strike price of SGD0.315. The pricing of the placement and the short expiry of the options lead us to believe that XMH is about to make an acquisition. Maintain BUY, TP SGD0.40.
SIA > UOBKH: Maintain BUY with a lower target price of S$13.30 (from S$13.50), mainly factoring in a 7.3% change in SIAEC’s target price. At current level, SIA is being valued at an undeserving 70% ex-SIAEC after adjusting for a 10% discount to fair value. We continue to value SIA on an SOTP basis and value the airline business at 0.9x FY14F book value.
CSE GLOBAL > DBS V: Our revised TP of S$0.97
implies potential returns of 22%. CSE has a resilient
business model supporting a 40% payout ratio (4.9% to
5.5% yield).
SHENG SIONG > DBS V: Sheng Siong Group expects more earnings upside from better operating costs and efficiencies. We have raised earnings by 5.0%/3.5%. The recent price weakness presents opportunities to accumulate. Upgrade to BUY with higher TP of S$0.76 (Prev S$ 0.72).
SIA --> Credit Suisse: Despite a weaker operating profit, SQ has been emboldened by the sale of assets to pay an enhanced 2HFY13 dividend ($0.17 vs. S$0.10/share last year), which goes some way towards balancing the company’s muted growth outlook and confused strategy, in our view … we wonder if this is change of direction.
● We are leaving our NEUTRAL rating unchanged, along with our S$12.60/share target price pending further colour from tomorrow’s analyst briefing, although we are more positively inclined by SQ’s apparent generosity to shareholders.
TECHNICS OIL & GAS --> OSK-DMG: Technics (TGH) announced that it has been awarded its first leasing contract worth SGD3.6m for two gas compressor engine driven packages for a Malaysian client. While we understand that the margins are good, this is a definite shift towards an asset-ownership model that will tie up capital. Given the weak outlook in the core Technics businesses, we are maintaining our SELL call with a TP of SGD0.64.
SINO GRANDNESS --> OSK-DMG: ... reported a 24% y-o-y growth in 1Q13 earnings to CNY70.5m. Results are in-line with expectations, accounting for 18% of our full year estimates as Q1 is traditionally the weakest quarter. Stock price has risen 23% since our last note. We continue to remain positive on the stock. Re-iterate BUY with unchanged TP of SGD1.74 based on our SOTP valuation. This translates into an undemanding 6x FY13F P
Oil and Gas stocks ---> DBS Vickers: Oil and Gas stocks have lagged the STI since April, triggered by the dip in oil prices and disappointing 1Q results, except for Ezion and Kreuz which sparkled amid a lackluster reporting season. The sector offers the highest return of 16% vs average market return of 5%, with value found in small caps trading at 9x PE vs 2-yr CAGR of 12.6%. With oil prices rebounding, and jack up market tightening, we expect interest in the sector to return.
Socar is reportedly close to signing a contract with Keppel Corp for one of four semi-subs to be deployed in the Caspian Sea. Nam Cheong’s recent contract wins will support stronger quarterly earnings going forward, and should underpin re-rating of the stock. CSE is a bombed out cyclical, trading at 8x PE, offering growth of 12% and dividend yield of 5%.
UOB Kay Hian: We remain constructive on the market with a year-end target of 3,600 for the FSSTI. We see deeper value in the midcap space, particularly for stocks with strong operating cashflow and company specific catalysts. Our top picks in Singapore are DBS, Keppel Corp, Suntec REIT, K-REIT, Ezion, First Resources, Courts, Triyards, Nam Cheong, Silverlake and Ying Li.
SATS --> Maybank Kim Eng: Ø We see a multi-year re-rating of SATS as we believe that the company is likely to structurally increase their dividend distribution to
shareholders. Upgrade to BUY and raise target price to SGD3.90.
Ø SATS announced special dividends in the last 3 years and we expect this to be the new normal. Management had previously highlighted their desire to optimize their capital structure (long run target: net debt to equity of 0.3X), which we view as a signal for structurally higher dividend distributions to shareholders.
KING WAN CORP --> OSK-DMG: Our high-dividend-yield pick, King Wan Corp (KWAN) will release results next week. We raise our 4QFY13F bottom line by 9.6% given the strong core business and clarify our expectations on the timing of the dividend. We expect KWAN to yield 8.1% over the next 12 months, increasing to 9.7% the following year. Maintain BUY with a TP of SGD0.40.
HIAP HOE --> OSK-DMG: The stock remains highly attractive from a valuation standpoint, as the value of its Zhongshan Park’s stake is already equivalent to its market capitalization, with the development business and the associated profit stream for free. We maintain our BUY rating on the stock with a TP of SGD0.79, based on 40% discount to RNAV to SGD1.32/share.
BUMITAMA --> OSK-DMG: We initiate coverage on Bumitama Agri (BAL) with a Buy call and SGD1.16 TP. BAL is one of the few large scale plantation company in our coverage which we project will sustain its profitability this year despite the lower average CPO price, courtesy of its surging production
and increasing percentage of prime mature areas.
We expect BAL to clock in net profit of IDR749.5bn this year, based on average crude palm oil (CPO) price assumption of MYR2,400, and hit IDR1,003.0bn in CY14, assuming a CPO price of MYR2,600. Even if the average CPO price stays flat at MYR2,400 in CY14, the company’s net profit will still go up by 22.3% to IDR916.5bn.
NextInsight
a hub for serious investors